Dow, Aramco project to be among last big chem complexes

04 August 2010 02:35  [Source: ICIS news]

Dow Aramco petrochemical complexHOUSTON (ICIS)--Dow Chemical and Saudi Aramco will build what will likely be one of the last large petrochemical complexes, as the Middle East loses its cost advantage in feedstocks, Dow chief executive Andrew Liveris said on Tuesday.

The two companies plan to build a massive complex in Jubail Industrial City, a change from an earlier proposed site at Ras Tanura.

"It's really going to be one of the last large complexes," said Liveris, who made his comments during an earnings conference call.

Liveris based his prediction on the likelihood of feedstock costs rising in the Middle East.

"At the end of the day, competitive-priced gas, and therefore ethane, in the Middle East has a very short time frame," he said. "That's why our Aramco joint venture is so important."

The new crackers being built in the Middle East are mixed feed, relying on natural-gas liquids (NGLs) and possibly naphtha, Liveris said.

"As a consequence of that, you're going to find that everyone is going to start having a rising tide of gas and ethane prices," Liveris said.

Another factor is the possible privatisation of the National Petrochemical Co (NPC) in Iran, a factor that Dow considers inevitable, Liveris said. Privatisation would change the natural-gas structure in the Middle East.

In fact, an analyst had said earlier that the NPC privatisation would raise natural-gas prices.

With those factors in mind, Dow and Saudi Aramco are designing their complex to tilt toward performance businesses, such as propylene oxide (PO), epichlorohydrin (ECH) and acrylic acid, Liveris said.

Liveris's comments followed similar ones he made during Dow's first-quarter conference call.

Then, Liveris said that the Middle East was running out of NGL production - in particular, ethane.

"It is mostly dry gas [methane] with the exception of Iran," Liveris said during the first-quarter conference call.

For more on Dow visit ICIS company intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Al Greenwood
+1 713 525 2645

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index

Related Articles